(Unofficial translation)

Good afternoon, I’m happy to see you all.

A fair economy is the realization of fairness and justice within the economic ecosystem. This is the only way for the people to be able to feel the true sense of fairness and justice in their everyday economic lives. A fair economy is also the foundation for innovative and inclusive growth. Without achieving a fair economy, neither innovation nor inclusiveness will be possible.

Leading up to today, there have been two fair economy strategy meetings. Consequently, I’m pleased that this briefing session will cover progress in establishing a fair economy, beginning with public institutions. I hope there will be another opportunity to brief the general public separately about achievements made in the private sector as well. 

The basis of a market is trust. The best market is one that’s transparent and free. Only when deceit and unfair privileges disappear and fairness takes root will small and medium-sized enterprises be able to channel their enthusiastic energy into making even better products. Only then will businesses be able to take on challenges and use innovation to spur their growth: Conglomerates will be able to further boost their competitiveness and earn respect from society. 

Consumers naturally come to trust superior products and finer services. Only when fair competition is guaranteed will economic vitality be revived through innovation and inclusiveness and Korea’s potential economic growth rate increase accordingly.

Trust in markets cannot be created overnight. A trustworthy market can be made only by formulating and steadily maintaining rules for fair competition. 

Over the past two years, my Administration has set new rules and a platform for markets to achieve a fair economy. It has laid the institutional groundwork to the best of its ability even when enactment of relevant laws has been delayed.

National Pension Service guidelines – “stewardship codes” – for steering good corporate governance by exercising voting rights have been adopted and the issue of conglomerates’ cross-shareholdings is mostly settled. Subcontractors, franchise store owners and employees in the retail industry are seeing improvements in trade practices. Subsistence-type businesses suitable for generating the minimum income needed to meet basic living standards have been legally designated and protected through a special act. The number of businesses that have introduced a benefit-sharing system has increased nearly 50 percent. All of this indicates that a framework for mutually beneficial cooperation between conglomerates and SMEs has been put in place.   

Public institutions are one area where the Government can show initiative and make hands-on efforts. 

As public institutions are linked most closely to the people’s lives, they need to take the initiative in setting a good example concerning a fair economy. 

Given our indispensable need for water, gas and electricity; health insurance and general hospitals; and transportation in the form of roads, railroads, ports and airports, the idea of living without public institutions is hardly imaginable. 

In addition, they play an immense role as key economic agents. Budget allocations for public institutions exceed 600 trillion won – about 35 to 40 percent of national GDP – and numerous suppliers and subcontractors conduct direct or indirect transactions with public institutions. 

Particularly in areas requiring large-scale investments, public institutions can play a huge role in disseminating fair trade practices as they are situated at the top of the industrial ecosystem. As a so-called rule maker, they can change the nature of business activities and transactions. 

Previous administrations exerted great efforts to ensure that public institutions adopted fair trade practices, but these fell short of public expectations. 

My Administration has been pursuing a whole new paradigm. It is all about seeking to improve trade practices autonomously and in a tailor-made manner by taking into consideration the characteristics of projects, unlike the methods of the past which mainly focused on imposing one-size-fits-all standards or sanctions.

For instance, fair trade practices cannot be the same in every market; the energy market for Korea Gas Corporation is different from the construction market for Korea Land and Housing Corporation. Hence, we need a flexible approach that is well suited to different market situations. 

The Government has worked to ensure that public institutions voluntarily and continually improve their trade practices through tailor-made methods that take into account the different nature of projects. The models to be introduced today are examples of autonomous changes for fair trade at these public organizations in terms of their work standards, regulations and contracts.

The Best Practice Model, which includes desirable trade practices, will also be presented. I expect that it’ll go a long way toward promoting the public good and economic vitality. 

First, the interests of the people, who are the consumers of public services and users of public facilities, have been taken into account more than before. 

One-sided contract clauses and waiver provisions that favor public organizations have been removed or improved. To ensure that burdens are not shifted lopsidedly to consumers and tenants, we made it a rule to strictly limit unfair clauses and provisions and engage in preliminary consultations.  

Second, proper payment has been guaranteed by forbidding the unfair transfer of risks or cost burdens to suppliers. This is part of a rule that requires public institutions and suppliers to fairly split their profits and burdens while protecting public safety and workers’ legitimate rights. 

Reasonable market prices, in addition to the lowest price, can be applied while the acts of unduly cutting prices, excessively curtailing construction periods and shifting responsibility have been constrained. 

When determining the ownership of technology and information and usage rights, legitimate payments in accordance with negotiations have been guaranteed. The scope of losses caused by force majeure has been expanded, thereby securing suppliers’ earnings and workers’ safety. 

Third, unfair practices between private businesses directly involved in trade and public institutions have also been blocked.

In order to prevent a structure of subcontracts from forming, joint ventures and the means for other horizontal contracts have been introduced. To avoid delays in payments to subcontractors and workers, public institutions are now required to make payments directly to them. Systems have been put in place to quickly hold accountable any companies found guilty of price rigging during the bidding process and force them to pay restitution. 

Since the terms and conditions for transactions with public institutions can become important grounds and standards for transactions among private businesses, they have great influence over markets. Public institutions, as pump primers to promote a fair economy, have the duty to reduce unfair trade practices by private businesses. 

The Government is initially planning a pilot program to improve public institutions’ trade practices and will expand these customized efforts to all public organizations and the private sector as well. 

To ensure that compliance with the principles of fair trade comes to benefit public institutions, it will be reflected in their performance evaluations as well as those of their executives and employees.  

Fair trade by public institutions is the point where the Korean economy starts to transition toward a fair economy. It constitutes building trust in the market. I ask all related agencies to cooperate so that this can be pursued in an orderly and farsighted manner.  

I hope that the Government and the ruling party will actively cooperate to ensure that the National Assembly quickly passes the pending fair economy-related bills. Once the legislative side has been completed, we’ll be able to talk more confidently about the accomplishments of a fair economy. 

Thank you.